Committee on Professional Ethics and Conduct of Iowa State Bar Ass'n v. Oehler, 84-396

Citation350 N.W.2d 195
Decision Date13 June 1984
Docket NumberNo. 84-396,84-396
PartiesCOMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF the IOWA STATE BAR ASSOCIATION, Complainant, v. Jay C. OEHLER, Respondent.
CourtUnited States State Supreme Court of Iowa

Lee H. Gaudineer, Jr., and Hedo M. Zacherle, Des Moines, for complainant.

Jonathan C. Wilson of Davis, Hockenberg, Wine, Brown & Koehn, Des Moines, for respondent.

Considered en banc.

HARRIS, Justice.

In this attorney disciplinary proceeding the respondent and the committee reached a stipulation on many of the facts and recommended a two-year suspension. Upon our de novo review of the entire record, including the stipulated facts, we find the respondent's license should be revoked.

The facts are inordinately complex and not easily subject to narrative description. Superficially, it might seem that the complexity is suggested as a defense, as if the respondent could somehow find refuge from the complaint in the difficulty of searching out the facts. If so, there is no such refuge for respondent here. In the first place, in view of the fiduciary relationships involved, it was incumbent upon him to show he faithfully discharged his stewardship. See Clinton Land Co. v. M/S Associates, Inc., 340 N.W.2d 232, 234-35 (Iowa 1983). In the second place, we think we have untangled the facts.

It is apparent that respondent engaged in a repeated practice, amounting almost to a habit, of using entrusted fiduciary funds for his direct or indirect personal advantage. There are a number of instances of representing both sides of what should have been arms-length transactions. On occasions one of the sides was his own personal one.

I. Respondent is an Iowa City lawyer, admitted to practice in 1951. The charges against him are derived from his mishandling of funds in a charitable trust. Those funds, in turn, were derived from the estate of Mayme Wagner, who died in Florida in 1963. She devised substantial real property in and near Iowa City to Gertrude M. Murphy. Gertrude Murphy had been a long-time secretary for respondent's law firm. Because of her advanced age and infirm health at the time, she was unable to testify in these proceedings.

It is readily apparent that Gertrude Murphy was unselfish and high minded. The stipulation explains:

Although Ms. Murphy had no desire to retain the properties, she did express an interest in fulfilling the cash bequests included in the prior will of Mayme Wagner. However, the only property remaining in the estate of Mayme Wagner was the aforementioned real property. In order to avoid personal liability and yet create cash funds to fund these cash bequests, the concept of creating trusts to incur debt and personal liability was adopted. It became necessary, therefore, to identify a trust purpose. Ms. Murphy, as a consequence of her career as a legal secretary, had often remarked on the inability of law school to prepare young lawyers in the practical aspects of the practice of law and it was decided to use the balance of any property remaining to further that secondary goal. The Gertrude M. Murphy Trust (the "trust") and the Wagner-Murphy Foundation (the "foundation") were created to fill these two goals.

Respondent became a trustee for the Murphy trust and, at the same time, represented it as attorney. He likewise became a trustee for the Wagner-Murphy foundation and also represented it as attorney. One or another of respondent's law partners served as co-trustee of the trust and foundation at all times. Both agreements provided that any action had to be by mutual agreement of both trustees.

The trust was established by an agreement executed October 7, 1965. The Iowa City commercial property, valued at $100,000, was deeded to the trust. The foundation was established by separate agreement on the same day and the farm land, worth $39,000, was deeded to form its corpus. The farm was subject to a $31,000 mortgage, so the actual value of the corpus was $8,000. Under the scheme, Gertrude Murphy was to receive the income of the trust for her life. Upon her death, the balance was to be transferred to the foundation.

The stipulation explains the purpose of the foundation:

Pursuant to the terms of the foundation agreement, the foundation property and income derived therefrom is to be used solely to teach the practical aspects of the general practice of law to duly enrolled law students at an accredited law college selected by the trustees. The foundation agreement provides that the trustees may withhold any distributions and may accumulate income for at least 15 years (until after October 7, 1980), but that the foundation property is to be ultimately distributed no later than thirty-five years (by October 7, 2001).

Starting in 1973, Gertrude Murphy was not provided with annual accountings. In 1981 she requested one which was provided to her, apparently to her satisfaction. Nevertheless, it is clear respondent did not use his best efforts either to assure the life income for Gertrude Murphy or to further the charitable purposes of the foundation. Rather, the de facto beneficiaries seem to have been respondent, his other clients, and his associates.

A. In April 1967, respondent and one of his law partners, who also served as trustee of the Murphy trust, loaned themselves $7,000 at 6% interest. The amount was later repaid, in part by what the stipulation describes as "offset against legal fees owing to the law firm by the trust."

B. Respondent also found the trust to be a ready source of funds for his other clients and interests. He represented four corporations: Halerbild Development Company, Monterra Investments, Inc., Monterra II Company, and Lanser, Inc. He was also a member of the board of directors and executive committee of Goodwill Industries. Respondent also invested money or has interests in Old Capitol Associates, Old Capitol Business Center Company, and Old Capitol Center Partners.

All these various corporations were benefited by respondent's access to the trust and foundation. For example, the trust sold a portion of the Iowa City commercial property to Goodwill Industries for $100,000, payable at $630 per month with interest at 7%. The payments were equal to the payments owed on the trust property.

Under the terms of the sale to Goodwill, the entire balance was to be due on September 1, 1973. It was not paid, however, until December 12, 1974, when Goodwill sold the property to Old Capitol Associates for $155,000. Respondent explains the discrepancy in prices by pointing to a federal grant which allowed $40,000 in improvements to the property. Although respondent invested no money in Old Capitol Associates his firm served as its counsel in connection with the purchase of the property from Goodwill.

C. The remainder of the downtown property, described as the "Gringo's property," was leased until January 1975, when it was sold to Halerbild Development Company for $70,000. Respondent was still a trustee at the time, yet his firm represented both Halerbild and the trust in the transaction.

The Gringo's property was later sold to Old Capitol Associates for $85,000. Soon after the transfer Halerbild paid respondent's firm $20,000 for legal services rendered.

D. Respondent also used the foundation assets improperly. Since October 1965, respondent, one of his partners, and Gertrude Murphy each owned stock in the River Products Company. The business mined and sold gravel, rocks, aggregate, and similar products. As of January 1970, the company had 64,794 outstanding shares. Respondent owned 3,474 and Gertrude Murphy owned 714.

Stock in this company was the subject of a number of sales and transfers. Respondent sold 3,000 shares to Gertrude Murphy. She later sold 4,000 shares to the foundation;...

To continue reading

Request your trial
18 cases
  • Ia Sup. Ct. Atty. Disciplinary Bd. v. Howe
    • United States
    • United States State Supreme Court of Iowa
    • 18 Noviembre 2005
    ...the system not be tainted by resort to hidden and conflicting agendas." Id. § 10.2, at 10-7 to 10-8; see Comm. on Prof'l Ethics & Conduct v. Oehler, 350 N.W.2d 195, 199 (Iowa 1984) (noting conflict-of-interest rules set out in DR 5-105 "are plainly in the public interest"). We think the con......
  • Iowa Supreme Court Attorney Disciplinary Bd. v. Powell
    • United States
    • United States State Supreme Court of Iowa
    • 15 Septiembre 2017
    ...independence of professional judgment of a lawyer whose loyalty to that person is total.’ " (quoting Comm. on Prof'l Ethics & Conduct v. Oehler , 350 N.W.2d 195, 199 (Iowa 1984) )). This concept is crucial to the client–lawyer relationship, and thus, it rightfully pervades our rules on conf......
  • State v. See
    • United States
    • United States State Supreme Court of Iowa
    • 21 Mayo 1986
    ...in the public interest as to require rigid adherence and strict enforcement by this court. See Committee on Professional Ethics and Conduct v. Oehler, 350 N.W.2d 195, 199 (Iowa 1984). Defendant then focuses on two specific code provisions. Ethical consideration 5-"2 A lawyer should not acce......
  • Iowa Supreme Court Attorney Disciplinary Bd. v. Barnhill
    • United States
    • United States State Supreme Court of Iowa
    • 30 Mayo 2014
    ...(Iowa 2006). We have recognized any person is entitled to complete loyalty from his or her legal counsel. Comm. on Prof'l Ethics & Conduct v. Oehler, 350 N.W.2d 195, 199 (Iowa 1984). The burden falls on the attorney to establish he or she discharged his or her duties by ensuring the client ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT